Amid escalating trade tensions, investors are increasingly turning to defensive stocks, which are known for their stable earnings and dividends. This shift in strategy is reminiscent of previous trade conflicts, where defensive stocks outperformed the broader market. Over the past three weeks, defensive companies within the S&P 500 have gained approximately 2.4%, while cyclical stocks have declined by 1.2%. This trend is driven by the market's volatility, fueled by tariff-related headlines, and the perception of defensive stocks as safer bets during periods of economic uncertainty.
The ProShares Ultra S&P500 (SSO) ETF experienced a slight decline, dropping 0.49% to $96.38 as of 11:20 AM on Wednesday, February 5.